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Gold stocks go through the roof

Shares in Australian gold miners rallied hard on Monday, with Northern Star Resources even hitting a new all-time high on an improved outlook for the precious metal.

The spot gold price jumped 2.2 per cent to $US1136 an ounce on Friday night, the biggest increase since mid-January, after a lacklustre US jobs report dented expectations the US Federal Reserve will lift rates this year.

Newcrest was up 9.6 per cent to a four-month high. Eddie Jim

"Today could be a game-changer, because nobody expected this sort of a jobs report," George Gero​, precious metals strategist for RBC Capital Markets, said.

In Asian trade on Monday, the gold price managed to hang onto Friday's jump, inching up to $US1137 an ounce.

But the price gains were outperformed by an 7.5 per cent jump in the All Ordinaries gold shares index, which added nearly $2 billion in value.

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By close of trade Monday, Newcrest was up 9.6 per cent to a four-month high of $13.80, Evolution Mining was up 7.5 per cent to $1.36, its highest in 2.5 years, Northern Star Resources was up 5.9 per cent to an all-time high of $2.85, OceanaGold lifted 7.4 per cent to $2.16 and Beadell Resources increased 10.3 per cent to 16 cents.

The session's strong gains are part of a longer-term trend; the All Ordinaries gold mining index has easily outperformed the broader All Ordinaries over the past 12 months.

"Gold prices are doing very well at the moment," said IG markets dealer Chris Weston. "There's a genuine belief that gold prices have seen the lows now and you're seeing good volumes coming into the buying."

Mr Weston said the poor jobs numbers in the US on Friday night had triggered a belief that more monetary easing was on the way, thus ensuring greater demand for the shiny metal. At the very least, a US rate hike could be delayed, he said.

"There's an increased argument that we're going to see a fourth round of quantitative easing, not just from the Federal Reserve but also from the Bank of Japan and the European Central Bank.

"This is a balance sheet expansion hedge. Everyone has decided they want to get back into gold and obviously the poor payrolls figure has helped.

"The payrolls number was very weak … we may well have seen the highs in the US dollar and that's going to be positive for the gold price."

Gold investors are tracking US data for clues on the probable timing of a liftoff in rates from the Federal Reserve. The jobs report - which showed employers added just 142,000 jobs in September, well below economist expectations of more than 200,000 new jobs - increased the likelihood that near-zero interest rates will persist into next year, buoying the outlook for gold.

"There is an atmosphere in the market that the US rate rise is going to be delayed," said Bob Takai, chief of Sumitomo Global Research. "This is good news for commodities in general."

Fed funds futures show a 33 per cent chance the central bank will increase its benchmark rate in December, down from 43 per cent on Thursday. The odds for a move in January are at 41 per cent and go up to 56 per cent for a move in March.

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